Indiana Court Rules Duke Must Cover Ice Storm Costs

The Indiana Court of Appeals ruled that state regulators acted appropriately when they rejected Duke Energy Corp.’s bid to pass more than $11 million in repair costs incurred during a 2009 ice storm onto its customers.

The court found the Indiana Utility Regulatory Commission did not have to explain the reasoning behind its October 2011 decision reversing the regulatory panel’s initial approval of Duke Energy’s request.

Duke Energy attorney Jon Laramore had told the court during Dec. 10 oral arguments that the panel’s reversal of its initial July 2010 decision was an “arbitrary and capricious action.” He also said the IURC didn’t explain how it reached two different conclusions based on the same evidence.

But in Friday’s ruling, the three-judge court said the IURC’s decision was similar to a trial court rejecting a request to throw out a lawsuit early only to make an unexplained about-face close to trial in dismissing the suit.

“In both instances, the evidence is essentially the same, and the ‘judge’ is not required to give an explanation as to why he changed his mind between one decision and another,” the court’s ruling said.

Duke Energy spokeswoman Angeline Protogere said in a statement the Charlotte, N.C.-based company respects the legal and regulatory process but disagrees with the ruling. She said the utility is reviewing it and had not decided if it would appeal.

IURC spokeswoman Danielle McGrath said the “IURC majority is pleased with the outcome, which affirms new findings were made in light of the second hearing.”

The Indiana Office of Utility Consumer Counselor, which serves as Indiana’s advocate for utility ratepayers, had appealed the IURC’s initial decision, arguing that Duke Energy’s request to pass on $11.6 million to customers was excessive.

The office’s spokesman, Anthony Swinger, said it’s pleased with the ruling because it confirms that the IURC’s October 2011 decision “was supported by the facts” and concurs that Duke Energy failed to demonstrate “proof of a dire, financial emergency as needed to justify the relief it sought.”

The IURC reversed itself after it reopened the matter in the wake of an ethics case that followed Duke Energy’s hire of the IURC’s former chief counsel, Scott Storms.

Storms, who had been both the commission’s top attorney and its administrative law judge, was fired by Duke Energy in November 2010 after just two months on the job after it came to light that he discussed a position with Duke Energy while presiding over hearings.

Gov. Mitch Daniels also ousted the utility commission’s then-chairman, David Lott Hardy, saying he knew about Storms’ ethical conflict but did nothing about it.

An internal audit by the commission found no evidence that Storms exerted “undue influence” on the panel’s decisions. The storm damage case is the only one the panel reopened following the ethics case.

Although Duke Energy had contended that the two opposite decisions were based on the same evidence, Friday’s ruling said that wasn’t the case.

Among the court’s findings is that the commission’s second order was based only on the ice storm case, while the panel in its initial decision considered the impact of both a September 2008 windstorm and the ice storm that four months later left tens of thousands of southern Indiana residents without power for days.

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